Cisco: Don't Be Surprised At Verizon Optical Deal
Nobody should be surprised that Verizon tapped Cisco for its coveted metro 100G contract, the vendor's top optical executive said this week. But he's not surprised by the surprise.
Cisco had a "very deep interaction" with Verizon Communications Inc. (NYSE: VZ), working closely with the carrier for two years before the contract award, said Bill Gartner, vice president and general manager of Cisco Systems Inc. (Nasdaq: CSCO)'s optical systems and transceiver group during a Tech Talk conference call event hosted by UBS Securities this week.
Verizon had a lot of input into development of the Cisco NCS 4000 platform the carrier ultimately bought, Gartner said. (See Cisco Scores 'Shocking' 100G Metro Deal at Verizon.)
Cisco also has a long-standing supplier relationship with Verizon for other products, Gartner said in a one-on-one follow-up conversation with Light Reading after the call. (See VZ Taps Cisco for SMB Routers and Verizon, Tata Push Telepresence Ties.)
"I'm not terribly surprised by the industry reaction to our Verizon deal because Cisco doesn't often wave the flag on optical," Gartner told Light Reading. "But they are not strangers to us, and we're not strangers to them. I do get defensive when people say they didn't know Cisco had an optical business."
One of the things that might surprise people about Cisco winning a spot with Verizon as an optical supplier is that that carrier already has ongoing supply relationships with four other optical vendors -- Ciena Corp. (NYSE: CIEN), Alcatel-Lucent (NYSE: ALU), Coriant and Fujitsu Ltd. (Tokyo: 6702; London: FUJ; OTC: FJTSY). "It was fair to ask, with four incumbent vendors, if they needed a fifth," Gartner admitted.
Gartner further admitted that if the metro decision just came down to a "product beauty contest," Cisco might not have earned that fifth spot. "If it was a pure product foot race -- who has the best 100G -- we might not have survived because those kinds of deliberations always seem to favor the incumbent vendors even if they don't have the best products."
Heavy Reading senior analyst Sterling Perrin, one of the observers who called Cisco's Verizon metro win a "shock," recently wrote in a research note to clients that Glenn Wellbrock, director of optical transport planning at Verizon, told him that the three differentiators that helped set Cisco apart from competitors were time to market, capabilities and price, in that order. Cisco's packet-optical integrated NCS 4000, which has been available since early 2014, preceded similar products in the market, such as Ciena's 8700 platform (although it's Ciena's long-standing 6500 platform that is sharing Verizon's metro network deployment with Cisco's NCS 4000.) (See Ciena Stirs Up the Metro Market.)
Gartner reiterated that Cisco did not just discount its way into the relationship. "Price was one of the factors, but not the only factor," he said. "We invested a lot in trying to find out what problems they faced, and didn't just try to sell them a box."
Gartner also said Cisco's status as a large, financially stable vendor that could support Verizon's ongoing needs had something to do with its win, as well as Cisco's ability to support Verizon TDM to IP transition with circuit emulation capabilities and its perspective on packet-optical integration.
The Verizon deal comes less than a year after Gartner, who already led Cisco's optical systems efforts, added responsibility over the company's optical transceivers group following the departure of former transceivers lead Adam Carter for Oclaro. (See Get Carter: Oclaro Did, From Cisco.)
Before Cisco, Gartner's career stretches back through COO stints at three optical startups -- Photuris, Mahi Networks and Meriton (all eventually acquired) -- to a run as VP/GM of Lucent's optical group before the Alcatel-Lucent merger. So, like Cisco, he's no stranger to optical, or service provider networks.
— Dan O'Shea, Managing Editor, Light Reading